Iraq cuts ties with US sanctioned bank

The Central Bank of Iraq has cut ties with a bank and its director after they were added to a US Treasury sanctions list on May 15 2019. Sabah Arar / AFPARAR

Iraq’s central bank on Thursday cut ties with an Iraqi bank and its director after they were targeted by new US sanctions against entities linked to Iran.

Local media reported that the Central Bank of Iraq ordered the country's financial institutions to cease dealing with Al-Bilad Islamic Bank for Investment and Finance, and its CEO Aras Habib Karim, after they were added to a US Treasury sanctions list on Tuesday.

Mr Karim is also Secretary General of the Iraqi National Congress (INC) and ran in last week’s election allied with Prime Minister Haider Al Abadi’s Victory coalition. He spoke out after being added to the US sanctions list for allegedly helping provide support to designated terrorists, calling the designation politically motivated.

“While we are surprised by the timing of the statement issued by the US Treasury Department, especially before the announcement of the final results of the Iraqi elections, we confirm that we have conclusive evidence refuting this defamation against me and the Islamic Bank,” said a statement published on Mr Karim’s website.

The US Treasury said the bank and Mr Karim had been sanctioned for helping to move funds to the Iranian Islamic Revolutionary Guard Corps and Hezbollah, both of which the US designates as terrorist entities.

Mr Karim vowed to challenge the designation. "These accusations are invalid, unfortunate, and bear no relation to reality," he said. “I will provide all the relevant evidence to the Central Bank of Iraq, which is the only regulatory body to which we are subject.”

Mr Karim was a close ally of and successor to INC founder Ahmed Chalabi, an exiled opponent of former dictator Saddam Hussein who pushed for the US invasion of Iraq in 2003. US officials later accused Mr Karim of passing information to the Iranians when he worked as Mr Chalabi’s intelligence head.

Since US President Donald Trump withdrew from the Iran nuclear deal on May 9, the US has issued three rounds of sanctions targeting Iran and Hezbollah.

The recent sanctions also targeted the governor of the Central Bank of Iran and key Hezbollah officials including leader Hassan Nasrallah and his deputy Naim Qassem.